5 years ago · Danielle Patton · 8,219 comments
By: Danielle Patton
Your metamorphosis from a bubbly, naive student to a responsible graduate can be both exciting and overwhelming, as personal finances becomes one of your central primacies. Imperative life lessons overlooked in school need to be understood and applied as rapidly as possible. Take a look at these five pitfalls you want to avoid as you plan your new life.
Waiting to Invest and Save
It can be mind-blowing to see your name on your first paycheck. However, avoid getting carried away with your novel lifestyle, as this period of your life is the perfect time to begin saving at least one-quarter of your income for future you. The smartest way to manage your income is to first launch an emergency savings account, accumulated with at least four months’ worth of expenses. This cushion can cocoon you through any unanticipated hiccups, like a car accident or losing your job. Afterwards, you can begin saving for your retirement. Be sure to also take advantage of any type of 401k matching program available at your job.
Living Without a Concrete Budget
In college, budgeting was perhaps a challenge, as you may not have had much cash to work with. After class, you could indulge in tons of online shopping sprees, fast food purchases, and other tempting buys. Nonetheless, as a degree-carrying professional now, sustaining a financial plan is one of the best way to financially stay on target. Since budgeting lets you to craft a spending plan for your cash, this process will ensure you will consistently hold enough money for necessary items as well as items you deem important to you.
Once you compose your first budget, try and get a reading on how it is working for you. It can be advantageous to map out your financial budget or plan for half a year or a year down the road. By doing so, you can effortlessly forecast which months you can spend more and when you’ll need to hold back.
Ignore Bad Credit
When it comes to applying for a mortgage or auto loan, properly handling debt can assist new grads in blossoming into financially dependable and credible individuals to lenders. This includes attaining appreciating assets and founding a solid credit history. What’s more, mitigating conditions can demand a recent graduate to take out an emergency loan. This critical situation has no room for consumption behavior and ruinous habits. Hence, it is essential for a plan to be in place.
No Life Insurance
The loss of a family member is shattering. Being crushed by mounting debt can worsen a person’s despair. It is for this reason life insurance is firmly recommended for recent graduates. Lack of planning and foresight can lead to financial and emotional distress for your loved ones. Fortunately, life insurance can help lessen a tremendous amount of this stress at a critical time.
No Student Loan Game Plan
It’s never too late to construct a durable strategy for conquering your student loans. First, verify the exact amount of money you owe. Next, record the interest rate for each one of your loans. It may be worth awarding extra payments on a loan with the highest interest rate depending on the conditions and magnitude of your other loans. What’s more, it is essential to grasp what these loan terms actually mean. Be sure to conduct some research and even speak with a trusted advisor to help you through this process. This can also help you qualify for student loan forgiveness. If you are unable to handle this debt correctly, it will have a critical impact on your financial future.
Getting ahold of your finances doesn’t have to be challenging, but it has to be done. However, if you can no longer maintain expenses, it may be time to consider other financial options. Contact our experienced New Jersey lawyers for a free consultation today.